MARKET SNAPSHOT: U.S. Stocks Dipping After Friday's Rally

By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

Greece worries resurface for investors; China rate cut brushed aside

U.S. stocks were trading lower on Monday, with the main indexes falling as investors look set to cash in on some of last week's healthy gains.

Trading has been choppy in morning trading with the S&P 500(SPX) switching between small gains and losses, at 2,114, with six of its 10 main sectors trading lower, with the energy sector leading losses. The Dow Jones Industrial Average (DJI) was 25 points lower, or down 0.1%, at 18,165.39 , and The Nasdaq Composite (RIXF) was switching between gains and losses and was flat at 5,002 in late-morning trade.

Jim Dunigan, market strategists at PNC Wealth Management, said it wasn't surprising to see the market pause after a strong rally on Friday.

"The jobs report showed the economy is growing strongly enough to make a September rate hike likely, though we still have to get past June," Dunigan said.

Friday's jobs report supported the view that the U.S. economy is on solid footing, but the data may not be strong enough to move up the timing of the first rate hike by the Federal Reserve in nearly a decade, said analysts. That "Goldilocks" report triggered the biggest one-day point gain for the Dow industrials (DJI) in more than a week. Friday's gains (http://www.marketwatch.com/story/us-stocks-a-cautious-move-higher-as-big-jobs-data-looms-2015-05-08) helped both the Dow and the S&P 500 finish a turbulent week modestly higher.

Read: "Earnings recession" on hold as quarter shows fractional gain (http://www.marketwatch.com/story/earnings-recession-on-hold-as-quarter-showing-fractional-gain-2015-05-10)

(http://www.marketwatch.com/story/earnings-recession-on-hold-as-quarter-showing-fractional-gain-2015-05-10) (http://www.marketwatch.com/story/earnings-recession-on-hold-as-quarter-showing-fractional-gain-2015-05-10)"At the same time, earnings were not as dire as forecast and are likely to rebound later this year," Dunigan said.

"Ultimately, an increase in Fed funds rate is a positive thing, even though we might have a market tantrum, because it means the economy is improving," he added.

Earlier in trading Monday, stocks were struggling to follow Friday's gains. Craig Erlam, senior market analyst at OANDA, said some investors will be cashing in as the S&P 500 trades near all-time highs, especially as there is little reason for levels to be broken right now.

"The U.S. has just been through a very difficult first quarter, and the Fed is contemplating raising rates. Neither of these are consistent with equity markets breaking into uncharted territory," he said in a note.

Another factor weighing on futures was Greece's bailout talks, which are taking place in Brussels Monday. Little progress is expected, as Greece's 750-million-euro ($837 million) loan repayment to the International Monetary Fund due Tuesday looms. Greece's Athex Composite index was down nearly 3%.

Read: 'Groundhog week for Greece'--analysts downbeat on Eurogroup outcome (http://www.marketwatch.com/story/groundhog-week-for-greece-analysts-downbeat-on-eurogroup-outcome-2015-05-11)

No boost from China: The People's Bank of China on Sunday cut its benchmark lending and deposit rates by a quarter of a percentage point (http://www.marketwatch.com/story/china-cuts-rates-as-economic-slowdown-deepens-2015-05-10) (http://www.marketwatch.com/story/china-cuts-rates-as-economic-slowdown-deepens-2015-05-10), but neither the U.S. nor Europe markets seemed to get much benefit from the signs of more stimulus.

The third rate cut in six months is "creating fears that Chinese growth will have to be manufactured by policy changes rather than built on more-robust growth foundations, limiting the feel-good factor for Western markets", said Rebecca O'Keeffe, head of investment at brokerage firm Interactive Investor, in a note.

Read: Don't buy into this jobs-fueled rally, market timer warns (http://www.marketwatch.com/story/dont-buy-into-this-jobs-fueled-rally-market-timer-warns-2015-05-08)

(http://www.marketwatch.com/story/dont-buy-into-this-jobs-fueled-rally-market-timer-warns-2015-05-08)Earnings season is doing a slow wind-down, with only 14 S&P 500 companies due to report this week. Dish Network Corp. (DISH) said it lost subscribers, but profit doubled (http://www.marketwatch.com/story/dish-profit-doubles-but-still-losing-subscribers-2015-05-11). Sotheby's(BID) profit and revenue topped forecasts (http://www.marketwatch.com/story/sothebys-profit-revenue-tops-estimates-2015-05-11). Dean Foods Co. (DF) posted quarterly results and an outlook that beat expectations (http://www.marketwatch.com/story/dean-foods-stock-surges-after-profit-sales-and-outlook-top-expectations-2015-05-11).

Baird raised the rating of both Joy Global Inc.(JOY) and Caterpillar Inc. (CAT) to outperform from neutral, sending those shares higher.

For more on today's notable movers read Movers & Shakers column (http://www.marketwatch.com/story/sothebys-dish-network-dean-foods-set-to-serve-up-quarterly-results-2015-05-11).

Other markets: Chinese stocks (http://www.marketwatch.com/story/chinese-stocks-rally-as-pboc-cuts-interest-rates-again-2015-05-11) rose for a second session on the heels of those rate cuts, with the Shanghai Composite Index gaining 3%. The Nikkei 225 index rose 1.3%, to its best close since late April.

The dollar (http://www.marketwatch.com/story/euro-lower-on-greek-fears-ahead-of-eu-ministers-meeting-2015-05-11)(DXY) moved higher across the board, with the euro (EURUSD) dipping on jitters about Greece. Gold prices (GCM5) were marginally lower, while crude-oil prices (http://www.marketwatch.com/story/crude-oil-futures-struggle-for-direction-after-us-jobs-data-supply-rise-2015-05-11)(CLM5) reversed earlier gains and were slightly lower.

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